Michigan No Longer A Safe Haven For Pharmaceutical Companies?

By Elizabeth Chiarello, Julie Becker, Rachel Rein, Sidley Austin, LLP

Pharmaceutical companies may soon face more product liability litigation in Michigan after the state repealed its unique Drug Immunity Law. The Drug Immunity Law passed in 1995 provided an absolute defense for pharmaceutical companies in product liability suits stemming from the safety and efficacy of their drug products. Michigan reportedly had the only law in the nation that shielded drug manufacturers and sellers from such liability. This article addresses the impact of this change to Michigan’s law.

Michigan’s Drug Immunity Law Provided A Near Absolute Liability Defense

Section 600.2946 of the Michigan Compiled Laws governs products liability actions. Previously, § 600.2946 included a provision, subsection 5, that shielded the manufacturer or seller of a drug from products liability suits so long as the drug was approved by the FDA. Specifically, the statute said:

In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the United States Food and Drug Administration, and the drug and its labeling were in compliance with the United States Food and Drug Administration’s approval at the time the drug left the control of the manufacturer or seller.

M.C.L. §600.2946(5). Subsection 5 was known as the Drug Immunity Law and operated as a type of safe harbor provision for drug manufacturers and sellers.

The law contained three exceptions. A drug manufacturer and seller could still be liable notwithstanding subsection 5 if they (1) sold the drug after the FDA recalled it from the market or withdrew its approval; (2) bribed an FDA official to secure approval of the drug; or (3) committed fraud on the FDA by intentionally withholding or misrepresenting information in communications with the FDA. The first two exceptions to the Drug Immunity Law were exceedingly rare as a factual matter. The third exception was preempted by federal law: only the FDA itself — not a court — can determine a fraud has been committed on the agency during the regulatory-approval process.

As a result, lawsuits could not be brought by Michigan consumers under Michigan law for claims barred by subsection 5, and they were effectively barred from joining national litigation against pharmaceutical companies when Michigan law applied to their claims. Because of the slim chance that a plaintiff’s suit could fall into one of the three exceptions to the law, Michigan was among the states with the most stringent protections for drug manufacturers and sellers. But now the law has changed.

A New Act

Senate Bill 410 changed § 600.2946, effective February 13, 2024. Removing Michigan’s drug immunity provision, the law has left intact the rebuttable presumption that manufacturers and sellers of products are not liable if their product conformed to the applicable standards or regulations — for drug manufacturers and sellers, presumably FDA regulations — at the time of the product’s sale or delivery. Specifically, the law states:

In a product liability action brought against a manufacturer or seller for harm allegedly caused by a product, there is a rebuttable presumption that the manufacturer or seller is not liable if, at the time the specific unit of the product was sold or delivered to the initial purchaser or user, the aspect of the product that allegedly caused the harm was in compliance with standards relevant to the event causing the death or injury set forth in a federal or state statute or was approved by, or was in compliance with regulations or standards relevant to the event causing the death or injury promulgated by, a federal or state agency responsible for reviewing the safety of the product.

A rebuttable presumption means that a plaintiff can offer evidence to overcome the presumption and maintain his or her case. The previous exceptions to the drug immunity provision were repealed along with the immunity provision itself.

What largely remains to be seen is how case law will interpret the rebuttable presumption in the drug manufacturing and sales context, including what type of evidence and how much is necessary to successfully rebut a presumption that a drug conformed to FDA standards or regulations. This is because courts previously dismissed Michigan plaintiffs in drug products liability suits under the specific drug immunity provision, not the general products liability rebuttable presumption. The guidance that exists for courts applying Michigan law under the new act is from other areas of products liability law, including medical device manufacturing and sales. Because courts have applied the rebuttable presumption in other types of products liability suits, courts and the parties will likely look to those other areas of law to inform arguments about whether the presumption has been rebutted in pharmaceutical drug litigation.

The law appears to preserve traditional defenses to products liability claims such as misuse, assumption of risk, and lack of causation as it does not include language that bars or alters them. And because the bill is not retroactive, it does not technically impose new liability for past harms or revive claims previously dismissed under § 600.2946(5). Nevertheless, this is a noteworthy change to Michigan’s products liability law that companies operating in Michigan should consider.

Potential National Implications

The change in Michigan law may have broader significance beyond the state of Michigan. Michigan plaintiffs’ ability to join in products liability drug suits against pharmaceutical companies could lead to larger class sizes and potentially greater exposure. This also means that plaintiffs with sufficient ties to Michigan may be more likely to bring lawsuits, with the added costs that are attendant to additional litigation. And companies based in Michigan may be more likely to see lawsuits in their home state.

Guidance For Pharmaceutical Executives

Pharmaceutical companies can take action to protect their businesses from meritless claims, in light of the change in Michigan’s law. Companies can, for example:

• Consult with in-house counsel or others at the company with respect to ensuring that compliance with FDA requirements during the drug approval process can provide support later on during litigation, if appropriate;
• Communicate early and often with in-house counsel and their advisors about the best strategies for identifying, hiring, and managing counsel equipped to defend litigation in Michigan, as needed; and
• Stay abreast of the development of the law with respect to the rebuttable presumption to best position the company’s defense in any future Michigan litigation.

Although the law has changed, the extent to which that will lead to significant additional litigation remains to be seen. There is certainly an opportunity for litigation that was not previously available in Michigan. But it may be that the law operates exactly the same as before, because the presumption of compliance with FDA rules and regulations cannot be rebutted or the evidence needed to establish such a rebuttal is high. Companies based in or selling products through Michigan should take note because the law is likely to develop in new ways in the coming months and years.

About The Authors:

Elizabeth Chiarello is a partner in Sidley’s Products Liability practice and helps clients in the pharmaceutical industry manage their most complex cases, including preparing high-stakes matters for trial and serving as national coordinating and trial counsel in mass litigation.

Julie Becker is a senior managing associate at Sidley, focusing her practice on the defense of companies in products liability and class action matters in state and federal trial courts across the United States.

Rachel Rein is an associate at Sidley, focusing her practice on commercial litigation and disputes.